Delta Air Lines stock can be considered OK. This and the stock market have moved at roughly the same pace over the past year, with only a few percentage points between them as each has fallen.
Investors have to wonder if Delta and the market will match up over the next few months. A slower economy and soaring consumer prices could hammer the market. High fuel prices are a challenge for Delta. However, help has come as passengers travel in greater numbers and pay more.
Delta faces other challenges, however. Labor shortages lead to delays or canceled flights. While some airlines hedge fuel prices, a relentless rise presents a particular challenge.
Air travel sometimes precedes both a slump in the economy and the resilience of the entire travel industry. Executives have day-to-day access to data. Wall Street’s chance to see traffic changes usually happens once a month. Leaders can bring prices down, to some extent, quickly. Wall Street often has to take the measure of old data or rely on analysts’ predictions. Either can signal concern.
While flight schedules help carriers circumvent cost barriers, fixed costs cannot be managed so easily. To some extent, a labor shortage means that layoffs are less of a tool for cutting expenses, and they continue to show the industry’s current predicament.
The cost of aircraft thus rarely represented a great cost advantage. Their benefits act as a way to control expenses that come more from fuel savings than ownership or lease payments.
The warnings about trouble in the economy number in the dozens. Delta represents one of them.